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Three Steps to Improve Sovereign Wealth Fund Performance

23 May 2017
Author
Andrew Bauer
Topics
Measurement of governanceRevenue managementSovereign wealth funds
Stakeholders
Civil society actorsGovernment officialsJournalists and mediaParliaments and political parties
Precepts
P7 P8 P9 P12 What are Natural Resource Charter precepts?
Social Sharing

Sovereign wealth funds (SWFs) can be effective tools for managing natural resource revenues. However, as their numbers continue to grow, with the largest funds managing hundreds of billions or even a trillion dollars in assets, researchers are paying more attention to how well these funds are governed.

Columbia University Press has published a new book on sovereign wealth funds, providing a sorely needed practical look at how these funds work—and how they should work. The New Frontiers of Sovereign Investment combines the insights and experience of academic economists and practitioners from several countries to survey fund activities and investments.

I was pleased to add a chapter to the book, titled “Playthings and Parallel Budgets: The Economic and Governance Performance of Sovereign Wealth Funds.” The chapter examines SWF performance over the last decades, concluding that success stories are the exception rather than the rule. I make three recommendations to improve SWF performance:

  • Clarify and align operational rules—namely deposit, withdrawal and investment rules—with the fund’s objectives.
  • Ensure independent oversight.
  • Prohibit home investments.

Andrew Bauer is a consultant with the Natural Resource Governance Institute (NRGI).

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  • Topics
    Beneficial ownership
    Civic space
    Commodity prices
    Contract transparency and monitoring
    Coronavirus
    Corruption
    Economic diversification
    Energy transition
    Gender
    Global initiatives
    Legislation and regulation
    Licensing and negotiation
    Mandatory payment disclosure
    Measurement of environmental and social impacts
    Measurement of governance
    Open data
    Revenue management
    Revenue sharing
    Sovereign wealth funds
    State-owned enterprises
    Subnational governance
    Tax policy and revenue collection
  • Approach
    • Stakeholders
    • Natural Resource Charter
    • Regional knowledge hubs
  • Priority
    Countries
    • Colombia
    • Dem. Rep. of Congo
    • Ghana
    • Guinea
    • Mexico
    • Mongolia
    • Nigeria
    • Peru
    • Senegal
    • Tanzania
    • Tunisia
    • Uganda
  • Learning
    • Training
    • Primers
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
    • NRGI impact
    • Board of Directors
    • Emeritus Board Members
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Grant-making
    • Financials
    • Privacy policy
    • Contact us
  • News
  • Blog
  • Events
  • Search